As more Canadians take up creative side jobs to make ends meet, a new survey suggests some may not fully understand the tax implications of having a side job.
The survey conducted by H&R Block Canada found that 44% of Canadian gig workers are willing to risk the consequences of not claiming all of their income this tax season as the cost of living continues to rise.
“While it is easy to think that smaller amounts could go unnoticed, by not reporting all income to the Canada Revenue Agency (CRA), Canadians face the risk of not only paying the full amount of tax owed if they are audited. – but they will also be charged interest and can face significant penalties if found,” Yannick Lemay, head of learning and tax specialist at H&R Block Canada, said in a news release. solstice.
For 74% of Canadian gig workers, these types of work are in addition to their primary source of income, such as their full-time job.
And while the gig industry may be growing, one in five gig workers (23%) say they don’t have a clear understanding of how this type of income needs to be paid at the time of calculation. tax.
Despite the fact that failing to declare all income at tax time is considered tax evasion and a criminal offence, almost half said in the survey that they are willing to risk not reporting income from taxes. your extra job.
That’s a disturbing statistic, considering that the consequences of tax evasion can mean paying the full amount of tax owed, plus interest and any civil penalties assessed by the CRA, subject to penalties. penalty up to 200% of the tax evaded, or even evaded. risk of imprisonment for up to five years.
“The good news is that there are literally hundreds of potential deductions and expenses that can be claimed; a lot of them put money in your pocket,” Lemay said.
“The gig workforce is incredibly diverse, so navigating tax-related benefits can be complicated. It’s important that you fully understand your particular tax situation, so that you don’t accidentally leave money behind on your tax return.”
The survey also found that 85% of Canadians worry their income cannot keep up with rising inflation, and 63% of freelancers cite inflation as the main driver for getting gigs.
In fact, there has been a huge spike in the number of people working in the freelance economy over the last year. In 2023, 28% said they took a gig job, compared with 13% in 2022.
Freelance work in Canada could continue to grow as another 15% of survey respondents said they are considering taking a side job in the freelance economy in the future due to rising inflation affecting Basic living expenses like groceries and monthly rent.
According to the Gig Economy Data Hub, freelance work is classified as income-earning activities outside of standard, long-term employer-employee relationships. Examples of these jobs include construction work, Uber drivers, freelance work, or dog walking.
